And a big round of applause to the blog "Down South" that caught the fascists on video and posted the footage up for all to see. This was important work, because not even the apologists can ignore it any more.

Ever needed proof that humble bloggers can make a difference to public opinion? See above.

Know who Tupac Katari is? If not you have no valid opinion on today's Bolivia

I fully agree with this excellent and insightful article written by Adolfo Gilly and translated into English by the website Ukhampacha Bolivia. If you are reminded while reading of the situation in Apartheid-era South Africa and the industrialized nations' attitudes towards the black majority movement at that time, I wouldn't be surprised. Here's the link, and here's an extract to whet your appetite:

".....what is happening is something much deeper and that goes much further than the elites, politics, and the economy. This is a questioning of the means of the historical domination by those elites, old and new. It comes from very far below, it is moved by an ancient fury, and it will not be stopped by the massacres at the hands of fascist groups nor by the fragile government agreements with the prefects of the Media Luna.

News of the Restless does Paraguay, and it's good to filter the actual interview via Bina to get some context. Basically Lugo was so darned impressive that not even the region's second worst hack could get snarky.

The Mex Files is my newest and bestest friend because he has sent me a freebie copy of his new book. I'm four chapters in already (it's far too readable for my own good...me got real work to do) and soon as I get a decent chunk of time away from numbery stuff I'm dedicating the necessary time to the book, so expect a review to appear here as soon as I'm done. (Note to world: Otto is shamelessly bought by freebies). Get your copy at this link right here.

Sapitos de la Noche is back from a Venezuelan jungle jaunt, and is making up for lost time with some great posts on his adventures. Go see.

Remember the US Peace Corps "emergency evacuation" from Bolivia? Want to find out how totally bogus it was from the Peace Corps workers themselves? Check over at Abiding.

The great news from Borev is that I came 'second runner up' in the fabulous caption competition. This magnificent result more than makes up for my unfulfilled life's ambition of getting to the final five in a beauty pageant. I'm wearing a tiara as I type.

9/26/08

Err...hate to say it, blogpeople, but full kudos to Benedict Mander for today's report in the London FT about the suitcase trial. However, poor Mander will now be accused of blatant communism because he dared put forward both sides of the argument about what's going on at the Miami trial.

Note to all other media services in LatAm: Look how easy it is to actually do a bit of fair reporting on Venezuela issues. 1) Write 517 words, 2) submit copy, 3) take the rest of the day and hit the bars for happy-hour G&Ts. What -ho!

But seriously, this is good work from Mander. I don't want political agendas stuffed down my throat, I want the kind of thing written below the line here (i.e. facts, and both sides of the story). Kudos to you, Blighty.

While President Hugo Chávez was touring Cuba, China and Russia this week with great fanfare, a court in Miami was hearing about what the prosecution claims was a more covert Venezuelan diplomatic mission that spectacularly backfired.

Witnesses have been providing evidence to support a tale of intrigue that they say involves secret agents, hush money, coercion and even death threats, that has fuelled speculation of corruption at the highest levels of the Venezuelan government.

It all began a year ago when Guido Antonini, a Venezuelan-US businessman, was caught entering Argentina with a suitcase bulging with almost $800,000 (€547,000, £435,000). Mr Antonini subsequently fled to Miami claiming that the money was a gift from Mr Chávez to help President Cristina Fernández’s election campaign, and this week alleged that the Venezuelan officials he travelled with were carrying other suitcases with a further $4.2m.

Both Mr Chávez – who is directly implicated in the case – and Ms Fernández, have denounced the trial as “garbage”, and a transparent attempt by the US at slurring the reputations of leftwing governments emerging in Latin America.

It has further undermined already shaky relations between Venezuela and the US to deteriorate yet further, which plumbed new depths earlier this month when Mr Chávez banished the US ambassador in Caracas. The US was also accused of having links to an alleged coup attempt that was uncovered the very same week.

After starting to collaborate with the Federal Bureau of Investigation in Miami, Mr Antonini was visited by men – allegedly on behalf of the Venezuelan government – who were attempting to keep him quiet, for which Mr Antonini demanded $2m in an FBI-penned letter addressed directly to Mr Chávez. But their conversations were secretly recorded with wiretaps, leading to the arrest of the men visiting Mr Antonini, for acting as unauthorised agents of a foreign government. All but one, Franklin Duran, pleaded guilty; he is the man now on trial in Miami.

Many analysts agree that the case, and the furore surrounding it, is highly politicised. “This case smells to high heaven,” says Nikolas Kozloff, the author of a new book on leftwing movements in Latin America. He points out that the key witness, Mr Antonini, who has been linked to radical sectors of the Venezuelan opposition that tried to overthrow Mr Chávez in a 2002 coup with tacit US support, “raises eyebrows”.

“The Chávez government has an axe to grind and we should be circumspect about its claims that the US has somehow tried to set up Venezuela,” he said.

Nonetheless, he said Washington might also have ulterior, geopolitical motives: by attempting to embarrass Mr Chávez it could be aiming to limit his influence in the region.

For example, in one of the taped conversations with Mr Antonini, it is claimed that Mr Chávez – who has also been accused of using his plentiful petrodollars to fund political allies in countries such as Bolivia, Peru and Mexico, as well as Colombian Marxist guerrillas – may also have paid governments in return for their support in his failed attempt to secure a seat on the United Nations Security Council in 2006.

To be honest the major drag on the local markets today are the bonds, and stocks are suffering as a consequence. There are spots of light here and there, but it's that "not money to buy equities" feeling again, and it matters little how cheap they be.

To the reader who bought Jaguar Mining (JAG) under $6.20 this morning for a daytrade; nice going, but I hope you took the 6.4o+ (you know who you are).

Fortuna Silver (FVI.v) is hanging in there. It has cash, and that's the whole ballgame in today's junior market.

Corriente (CTQ.to) (ETQ) is still strong, up at $4.93 on low volume. This is a referendum play, and I really don't know how it will trade Monday when Studmuffin's 'yes' vote is confirmed. I'm just too chicken to buy anything today, even the good ones; that's the bottom line.

Freeport (FCX) is off 9% on heavy volume. For some reason this has something to do with Agrium's downgrade today, but I can't for the life of me understand the connection (apart from 'let's panic about commods again, sheeple'). This kind of PPS action vindicates me and my current non-participation (or at least I like to pretend it does :-).

Mercado Libre (MELI) is down at $22 now. This thing does have a bottom to it, and it's more a case of "when" than "if". It's not fabulous, but it's not that bad. It has growth and as close to a sector monopoly as is possible. Costs are low and importantly it makes a net profit. The chart also looks like one of those falling wedges on slackening volumes that Biiwii Gary gets all hot'n'sticky about. Have a look for yourself, but that looks rather buyable to me.

...but there's just space for one snarkshot before I leave it alone. As part of his official declarations, obvious liar Antonini Wilson said that it famous $800k briefcase/suitcase/whateveritwascase wasn't his, had had nothing to do with it and he was just helping out etc etc. His exact words were:"All I did was to help carry the bags to the cars in a gentlemanly gesture to the assistant Victoria B.".

Well apart from the minor detail that before the briefcase was opened before his eyes by customs he first lied twice about its contents and then finally said it contained money, let's check out this photo of Antonini and his lawyer taken outside the courtroom on Wednesday.

As we can see, Antonini Wilson manages to make the gentlemanly gesture of carrying a cellular phone while his lawyer struggles with not one but two bags.

Otto sez: Actions speak louder than words, gentlemanly is as gentlemanly does, and this dude is a serious piece of shit.

One of the first prejudices that gets wiped from the brains of gringos on virgin visits to Latin America is the one about the region being backwards, planted in the 1970s and all that. True that there are patches of non-urban LatAm that are berift of vacuum cleaners and dishwashing machines have never really taken off, but all the world's brand names are on offer and just as loved here as they are 'up there'. Foreign brands are common and coveted with Nike, Nokia and all their friends typically popular. Some other tastes are quirky and local, such as the way Sony is still undisputed head'n'shoulders-above-the-rest king of music systems. And some are full eyebrow raisers; for example, if you've ever been in a bar and ordered a Something Special single malt scotch in preference to Johnny Walker or Glenlivet, it means you've almost certainly visited Venezuela at some point in your life.

But local brands are the most interesting aspect. In the last few years, strictly LatAm brands have taken on an air of respectability that would have been impossible to imagine even 10 years previously. The charge is lead by Brazil (rightly proud of their world independence and economic power), and Mexico (perhaps the most sophisticated regional market for marketing, if that makes sense), but the latest stage of this phenomenon is the acceptance of regional country brands across the region.

America Economia today published its annual "50 biggest public brands" list, which shows the 50 most important regional brands run by publicly traded companies. Here's the top ten from the list, with a quick familiarization line or two from your truly underneath.

(chart shamelessly stolen from America Economia)

Itaú: Brazilian bankBradesco: Brazilian bankBanco do Brasil: Brazilian bank (see anything in common with the top three? Nah, me neither)Cemex: Mexico's top brand-name company that boasts it can deliver cement quicker than Dominoes can deliver pizza. Went up even further in my (and many other's) estimation thanks to this story.Claro: Carlos Slim takes over the region. The Claro telephone brand now stretches from Tijuana to Tierra del Fuego, and is at the leading edge of America Movil's enormous LatAm communications empire.Telmex: Right behind Claro, Telmex is how it all started for Slim. Big in Mexico (duh) but now making inroads into the fixed line biz in South America (though Telefonica de España still leads by a country mile South of the Darien Gap).Petrobras: The pride of corporate Brazil, and now a world energy player.Telcel: Slim's Mexican cellular brand. Note he owns three of the top ten regional brands; now you know why he's fighting for the world's richest person slot.Unibanco: Brazilian bank (see above)Banco de Chile: Chile squeezes into the top ten despite its small relative market size thanks to the highly respected Banco de Chile brand.

Please note that the brands above are strictly from public companies. This explains why Argentina's Arcor (massive food company, but still in private hands) doesn't make the top ten list, or Venezuela's PdVSA (which to the surprise of outsiders dwarfs Petrobras and is a constant source of impressive national pride no matter what government is running the thing).

The rise of the pan-regional local brand is already here. Bank with Brazilians in Argentina, spend your telco money with a Mexican company in Peru, construct your new house with Mexican cement in Colombia, fill up your tank with Petrobras just about anywhere. It's yet another aspect of the growing regional independence, and overseas companies that are looking to break into the region with their own brands should be aware there is a new layer of competition, and it needs to be taken very seriously. I mean, would you consider any US bank as projecting a strong image right now?

Finally, for those of you wanting to read more (in Spanish, I hasten to add),click here to download your free PDF copy of the full America Economia report on the 50 biggest regional brands. Recommended reading.

First gold, and it's printing $890/oz right now. I got a mail yesterday about the "Emperors with no clothes" post that said I was probably gloating too soon. That misses the point; I wouldn't hold gold if I thought it was going down. All that's being said here is the 3 month treasury bill is the place to look for direction on gold, not a bunch of tinfoil hatters and their ravings. This is the comparative post, and it's very simple, not brain surgery. Remember just one line to see where I'm coming from: Goldbugs give gold investors a bad name.

Now Zn, and this one from Reuters is just more confirmation about the current bottom. Adam Smith would approve.

9/25/08

In the ongoing quest to make sense of the tangled disaster called the stock market version 2008, here we go with one of the three must-watch charts in my humble little world. Gary calls it the gorfest, but we normal people (hehe) give it the long name of "the gold to oil ratio".

(click to enlarge)

What I see is a bit of calm on the horizon for the ratio, and that would be no bad thing. The RSI is coming off one of its intermittent overbot peaks, the MACD is a squiggly line down there that looks good even though I don't trust it much, but notably the 200dma has rolled like an ocean swell since my daughter was born and the ratio is coming back in the fold right here.

So my tentative proposal (that will be changed at a moment's notice if need be......Hey! I'm getting the hang of the technical analysis :-) is that gold and WTI run together for a while. This would point to calmer waters all round (and a likely predictable dollar for the period). And I don't know about you guys, but I'm fed up to the back teeth of living in interesting times this year and a bit of boredom would suit me just fine.

Bottom line: A GOR averaging a steady 8.0 for a couple of months would be good news. It remains to be seen whether we catch a break on that.

Another family member of another powerful government minister is arrested in Colombia, suspected of collaborating with the right wing paramilitaries and their death squads. The world reacts in the usual way, kinda "yeah, but they're from the right...and they're not the FARC...so being raped and murdered and stuff isn't so bad when it comes from that side, is it?"

EvoQuote du jour; "These coup-mongers are mistaken; they have no support nationally nor internationally." Talks between the two sides broke down today, but the whole shabang continues next Monday.

In Argentina, the Antonini Wilson suitcase trial thingy is the object of all attention, and those who watch closely are beginning to see large holes in the Antonini Wilson testimony(though you'll notice that link is only available in Spanish, as English coverage wouldn't dare criticize the prosecution or do silly things like 'look at details').

In Peru, congress has been under pressure from a citizen's campaign. It was really quite simple; by Peruvian law, members of congress must reveal line items of expenses claimed to any citizen that asks (with reasonable time lapses, of course) and a campaign has been developing to ask for expense accounts en masse (see the 'Adopt A Congress Member' campaign over at site-friend Susana Villaran's blog, for example). So Congress last night came up with a great solution: They simply changed the whole law and now they don't have to reveal a thing. Even by corrupt latino politician standards, this one took my breath away.

In his mailbox, Otto has been widely slated for mentioning US politics. Ok folks...like I say it won't happen again.

This is not my patch, and I promise not to mention it again here. Honest. That said, here we go;

Please don't do this to yourselves. Don't do it to Latin America, either. Or anywhere else. Not least Russia. I really don't have anything much against McCain. He seems like a stand up guy from what I see down here, he is a true hero and if you say you like him more than Obama that's fine by me. But he's made a massive mistake in his pick for Veep. Admit it. Don't put this person that Katie Couric interviewed even close to anything that resembles executive power. From CBS today

Katie Couric: You've cited Alaska's proximity to Russia as part of your foreign policy experience. What did you mean by that?

Sarah Palin: That Alaska has a very narrow maritime border between a foreign country, Russia, and, on our other side, the land-boundry that we have with Canada. It's funny that a comment like that was kinda made to … I don't know, you know … reporters.

Palin: Well, it certainly does, because our, our next-door neighbors are foreign countries, there in the state that I am the executive of. And there…

Couric: Have you ever been involved in any negotiations, for example, with the Russians?

Palin: We have trade missions back and forth, we do. It's very important when you consider even national-security issues with Russia. As Putin rears his head and comes into the air space of the United States of America, where do they go? It's Alaska. It's just right over the border. It is from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right next to, they are right next to our state.

Right now the world's media is descending on Quito to cover the big bad constitutional referendum that's happening this Sunday, September 28th. Well...ok...maybe a dozen journalists are making ther trip, but no matter...it's the thought that counts (and let's see if they can string two or three lucid ones together on LatAm affairs for a change). So I thought scoop 'em all and mark your card with the most important stuff before the pro-hacks file copy for tomorrow's edition.

1. "Yes" will win. Bet the farm on it. No point adding a thousand extra words here. Obvious is as obvious does.

2. Important news: Boz and I have a side bet going. For those who don't know, boz is a popular blogger on Latam affairs, you can find his site right here, and you'll be happy to know that unlike Otto he actually lets his readership comment freely (obviously hasn't learned just how much fun dictatorship is yet). Anyway, boz says the pro-Studmuffin "Yes" vote gets less than 60% total, I say it gets over 60%. In play are bragging rights and a $10 donation to charity made by the loser (though the winner will probably end up donating too).

3. Opinion polls have been banned for the last three weeks, but a poll out this week that closely tracks the referendum puts Studmuffin's popularity at a near all-time high. Here's the link to that. Tremble, boz ;-)

4. The Muffin Man has also arranged a neat looking victory party for Sunday evening and has invited Chávez and The Village People along. Here's a snap taken at the Dress Rehearsal today.

5. Once this is all over, our raving capitalist observers from Canada will finally get their wish and see the official published New Mining Law, due out October. With that in mind, it's time to buy a chunk of CTQ methinks (and I have to say it's been strong as an ox all week. Nobody selling that paper).

6. Nearly forgot to mention; for good quality coverage of the referendum in English, I recommend Stephan Kueffner at Bloomberg and Alonso Soto at Reuters. Both know their territory well and are fair voices.

....but they really suck at calling the market(all links from Kitco.com in the last few days, and I could have quadrupled that list if i'd wanted to labour the point). Sorry, but somebody has to tell you and it may as well be me.

Dr. Copper couldn't hold its $3.30 level and dropped back yesterday, with the move being confirmed this morning and Cu sitting at $3.16. However, Otto's beady little eye is on zinc. Spot Zn has been the whipping boy of the BM complex for a while, but the clear indications of a bottom in prices just keep on geting confirmation added. The upmoves of yesterday and today have "healthy" stamped all over them.

In the last few weeks we've seen plenty of news about lower production forecasts for this year, and the Ausie metals people calling a 10% drop to already reduced numbers last week was just another example. It really does come down to good ol' fashioned Adam Smith supply & demand stuff; while the market surplus continues so do the low prices, but there is always a limit to this price drop, as miners stop producing so supply dries up, and I'm confident about saying that it's here (or already passed, really).

Keep thinking zinc, folks. It's that "buy while they sell, and sell while they buy" thing. Here's a re-run of Zn plays to consider.

BWR.to Breakwater: High beta zinc miner in the Americas that's been pummeled to merry hell this last year. This one is playing the metal, but on steroids. A nice ST trading vehicle for the metal. Check the 1 year chart and 3 month chart to get a feel, and note the volume spikes.

BN.to Blue Note: Very cheap and very diluted. High cash costs at its Caribou mine. This is speculative, but risk/reward means you could try a few shekels (I have to say i prefer BWR)..

VEM.to Vena Resources: Just waiting on its enviro permit (any day now, sez the Peru gov't) and this thing will be the owner of a Zn mine making a profit,and that's even if Zn drops to $0.75, according to my casio. Stupidly cheap here. Remember that Vena is a site sponsor here. Also remember I don't reco dross.

LMC Lundin: Has other worries right now (example govt of DR Congo), but it's a traditional Zn go-to play.

VOLCABC1 Volcan: If you have access to trading the Peru stock market, look no further for your Zn exposure. This very large Zn producer is due a good relief rally. Plenty of Pb and Ag exposure too (as you'd imagine).

9/24/08

So let's just re-cap on Guido Alejandro Antonini Wilson a moment, shall we? According to the image, information, spin, image-grooming and all other things suchlike, we're basically being fed the following story:

2)The money was being given to the Kirchners to finance their election campaign

3) The money came on Chávez's orders and travelled with a whole posse of pro-Chávez & Kirchner people.

4) After he was caught, this guy who was tight with the Chávez gov't and money mob turns against his boss for the sake of his family, became an informer for the US Feds and betrays former close friends, PdVSA officials and the Venezuelan government in return for immunity and protection in the USA.

Does that sound about right? Well, what if I were to tell you that

Antonini is not some sort of hired bagman for the Chávez government, but in fact a multimillionaire hotel owner in Miami with a stable of very expensive cars to his name.

Antonini is close friends with Carlos Andres Perez (aka CAP) the ex-Venezuelan president who hates Chávez and famously said he wants him to 'die like a dog'.

Antonini hates Chávez as well, calls him "a disgrace" and predicted the coup d'etat in 2002 by saying just weeks before it took place that "Chávez won't last. He's going to fall soon. We're going to bring him down."

And when he said 'We', he obviously meant it. This because when the other person put forward counter-arguments about Venezuelan army loyalty etc, Antonini Wilson said "Remember what I say. We're taking Chávez down. He's going to finish in jail."

The explosive story about the time the acclaimed and respected Peruvian author Jaime Bayly met Guido Antonini Wilson was published by the author in January this year. Bina at News of the Restless has done an excellent job of translating it into English and the link is right here. Kudos, Bina.

If you only link through from this site to one LatAm political story this year, make it this one. This is required reading for anyone remotely interested in the case, and is ample evidence to show that the whole Miami trial is some sort of circus cooked up by those wishing to discredit the governments of Argentina and Venezuela. Here's the link again, just in case. Now go read it. Unmissable. Once you do you'll know that you're being lied to.

I've been following the Antonini Wilson suitcase going down in Miami the last couple of days, and so far the thing has spattered Los Kirchner with some embarrassing mud. Maybe in another country or a parallel universe or something there would be calls for Kirchner resignations by now....but c'mon....this is Argentina...you hear me? Find a single non-corrupt politico in the power echelons of that country (who isn't an ideology freak or a nutbar) and you're doing better than me.

But today's 'revelation' is more than weird. Bloomie's headline of "Chavez Was Sent Letter Seeking $2 Million for Courier (Update2)" just about sums it up, really. What went down is that Antonini Wilson signed a letter that was written by the US Feds and sent to the H man himself. In it, Antonini asked Chávez for U$2m hush money (details at that Bloomie link...check it out yourself).

Chávez didn't reply to this letter in any way, it seems. Now I'm not an attorney, trial lawyer, Fed head, judge or anything like that, but it does seem like the prosecution is saying to the jury;

"The US gov't wrote a wholly false letter, then along with our informant pretended it came from Antonini and sent it to Hugo Chávez in order to blackmail the head of state of a sovereign nation. It didn't work. However, this makes us look good and honest and trustworthy, and Chávez look all bad and evil and untrustworthy."

Am I missing something here, or are US prosecutors really that stupid?UPDATE: That bloomie story is now an "Update 3", so it must be important or something...errrr like....dude....

I did some ringing round, and now officially warn that Apex Silver (SIL) is being kicked around by professional scummy shorts and pump artists. I said "avoid" yesterday, i now add "like the plague" to that call. Don't go near this crapola....no short, no long. You cannot beat this kind of BS manipulation, you can only get lucky and guess right at the right time. Don't fool yourself, and unless it's an official filing you can no longer believe a single word you read about SIL. The stock market attracts the dregs of society sometimes like flies around shit (or should that be honey?).

Dorato Resources' (DRI.v) 22% jump today looks very sexy until you see it's just one single cross trade of 10k shares. Regular readers here will know more about this stock than most ;-)

Telecom Argentina (TEO) is catching my eye again. Last week's dump has washed through and it's up 5% at $12.90. Not buying anything, but if this shows confidence in the days to come it'll get on the shortlist.

Inca Pacific (IPR.v) is putting in a bottom at last? Jeesh, what a bad trip this has been. Great fundamental value, serious management and an advanced copper/moly project. Zero love from the market. Another positive to note is how CEO Tony Floyd has kept buying his own stock on the open market all the way down without selling a single share. He knows a bargain, at least.

For the past 10 days, doctors have been on stike in Peru. The reason is pay and conditions (surprise), but the real bad feeling between doctors and the gov't goes back to January this year when both sides reached agreement on pay rises and improvements in working conditions, the Health Minister and the Doctors' Executive signed the papers and everything was done and dusted. The García government promptly ignored the accord, refused to honour the agreements and brought the matter to a head this month.

On Monday in PunoGladys Huaraya, a 28 year old woman suffering a urinary infection, entered the local state hospital. She waited at the hospital in increasing pain all that day and was finally given a preliminary examination nine hours later. A couple of hours later she died from avoidable complications arising from the infection.

Who's to blame for her death? I'm sure you won't be surprised to learn that the doctors are laying the blame at the door of the government, and the gov't is laying the blame at the door of the doctors. However, as yet neither party has been to the house of Gladys and explained to her three children why their mother won't be coming home.

Moral of the story: To find out what's going on down here, read more blogs and less mainstream media. Abiding with tell you the same. So will borev. So will Bina. So will Mickey Fulp. So will The Mex Files. And so will Sapitos......................

I've been telling you for a while about underlying supply crimping in the copper and zinc market and how it will affect things going forward, but as these day the average trader thinks holding over the weekend is long term exposure it hasn't grabbed much attention. Let's hope a suit in London can open your eyes to the slow-motion trainwreck happening right here right now.

Meanwhile, a complete dickhead decides that he knows about Apex Silver (SIL) all of a sudden and gives us his thoughts on rumours in the Bolivian press even though he doesn't understand Spanish. This person will be read hundreds of times this morning at SeekingAlpha, and this is why I've been largely turned off the site. Some contributors are smart, but a lot are total idiots. I mean, this fool gives us the advice "buy low sell high" after the fact, and two minutes of checking shows that he said "buy low sell high" for Ambac in February 2008! Just another example of how much crap is available to read on stocks.

Over at Abiding in Bolivia, El Duderino shows empirical proof as to how the US academics lie to the press and the public about Bolivia. As El dude points out, this stuff is important; we can disagree on the subjective stuff, but if the person is using plain, straightup factual BS to uphold their slanted views we are morally obliged to laugh at them...and then sack them hopefully.

Meanwhile, da borev has a great new game. I've entered five times already, for what it's worth. Go play now!

9/23/08

The above is a circular from Venezuela's superintendent of banks dated 23rd September (today) that was sent to just about anyone that handles money in the country today. Here comes the translation (which is full of financialisms and legalese and tough to translate succinctly from this type of blahblah Spanish to English, but what you need to know is in bold-type)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

(Standard protocol letter beginning) I am writing in conformity with the established rules of article 238 of the Decree with Range, Value and Legal Force of the Partial Reform of the General Law of Banks and Other Financial Institutions, in order to instruct you to set aside provisions equivalent to fifty percent (50%) of assets held or established in any type of deed emitted, constituted, backed or guaranteed by Lehman Brothers and Merrill Lynch investment banks or any of their branches, affiliates or connected or related businesses.

The provision referred to in the previous paragraph will be constituted in the lapse of one (1) day from the date of reception of this circular and a certified copy must be sent to this organism and subscribed by the president of this institution, with receipts that show compliance to that instructed here. Said receipts must be accompanied by a breakdown that details the assets subject to the provisionment. In the case that the instituion does not possess the type of asset described it is equally obliged to send to this organization a certificate of the president of said institution that does not prejudice the applicationof the sanctions that would take place in the occasion of non-compliance with the aforemetnioned instructions.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

So what does this mean? Does this mean Venezuela is in bigtime hock to the LEH and ML collapses? Does this mean there is panic in the streets of Caracas tonight? Does this mean that Anti-Chávez media will be able to cast doubt on the stability of the country's banking system?

The answers to those questions are 'no', 'no' and 'yes' in turn (and the last one is only a 'yes' cos they'll grasp at any straw available). What's going on here is a smart piece of CYA (cover your ass) from the gov't circle which also allows them to find out something they really want to know (ie how much crap they're going to get splattered with).

This provision is basically asking the bankdudes to write back to the gov't banking ombudsdudes and say, "Don't worry, we're cool and covered dudes" one by one. Those without exposure to LEH and ML toxicity just say so, and those with exposure just say "yep, we have some of that shit but we have the hole covered, no worries, pretty promise."

This then allows the gov't dudes to go to the Chávez dude and say "we have no problem with the toxic fallout from the USofA, H-man, and I have a piece of signed paper to prove it!", which then allows the H-man to go on Aló Presidente this weekend and say "Good news everybody! We're totally free of problems from the Empire's banking collapse, and they've even given me a signed piece of paper to prove it!"(cue applause from people wearing red).

So despite what you might read from the pen of Simon Romero, Andes Oppenheimer or any of their wretched neophytes tomorrow, this is no big deal. And if caca does hit a ventilador and a Venezuelan private bank gets in problems from any future LEH/ML toxic fallout, Hugo's gov't will have a piece of paper that the same troubled bank's topdog signed which will be more than enough for the gov't to be able to say "Aha!! The Capitalist swine lied to us! Throw him in jail!".

So now you know how CYA works in LatAm (not just Venezuela I hasten to add). Any questions?

That was then (triple chin, medallion, Just For Men coiff, total wide-boy look)

But this is now (1 1/2 chins, sober suit, starched collar, mature'n'respectable)

You've come a long way, baby....

In Miami the star snitch/witness Guido Alejandro Antonini Wilson took the stand today, and as suspected didnt say much to incriminate the officially accused, Franklin Duran. On the other hand he dropped a couple of right-on-schedule bombshells in the lap of Los Kirchners. A lot of waffle was waffled, but the two things you need to know are:

1) A couple of days after getting the $800k suitcase snatched off him by this person, Antonini met with the bossman of PdVSA Argentina, who asked him where the rest of the money was. Antonini came on all innocent like (according to his testimony today, anyway) and said "what money?". Señor PdVSA replies, "The other $4.2m that came in the other suitcase."

2) Antonini Wilson today testified that he was at a reception in Argentina's "Casa Rosada" ("The Pink House", and official city centre presidential palace) at the same time as the H man. This directly contradicts the Argentine Minister of Justice, Anibal Fernández, who said last week, "Let's finish once and for all with this story that he (Antonini) was in the Casa Rosada.."

He also made it clear that the $800k suitcase wasn't his, and it was Claudio Uberti's. To remind you, Uberti is/was the Kirchner's right hand man and at that time was in charge of the public office that controls Argentina's toll booths....I mean, no ready cash in that department, is there?

Apex Silver (SIL) is giving me a nosebleed just by watching it. Look at the 5 day chart........and you go "wow". Then again, if you look at the one year chart....

....you go "ouch". The flimsy rumour/story going round is that Bolivia is handing out some sort of guarantee to miners. As I wrote to A.N Other, what the devil does a Bolivian mining guarantee mean, anyway? I think it's a pumped-up rebound over an oversold stock that's still in trouble but is unlikely to go to the wall (mainly due to having Sumitomo as a partner at San Cristobal), no more and no less. Buy some here and it's heads or tails for double or nothing...not my idea of investment. If you'd like to know more, there's a great new way of learning the deep details :-).

So much for my great beat-the-market, spot-the-window call of Cosan (CZZ) yesterday. Moody's decided that it's a great time to downgrade company debt and, to add insult to injury, keep the negative outlook rating. The result is the 7% extra bonus drop today. Plop.

I remember a few months back (in April, to be precise) telling the world a plain fact about Tenaris (TS), namely that it isn't an Argentine company. All sorts of people got bitter'n'twisted on me about that one. Well now the ostriches can go complain to MSCI, not me. Frontierworld, here we come... Yeeehah...yippy yay yeah!

Novagold (NG) down 7% at $6.81. The "kick me" sign worked a treat, it seems.

Los Andes Copper (LA.v) was cheap at 0.45. It's even cheaper now the PPS has been sliced in half by this ruthless bear market. Now at 0.22 and I truly despair at how cheap this thing can sit without attracting interest. Good position, good mgmt, great project, right metals, right country. But no love. Uff.

Look, even though it'd be very easy I'm not going to lay on a whole heap of hyperbole here. Just read the press release below. What I will say is that grade returns like the one just announced by Fortuna Silver are rare birds indeed. And they found 3.3g/t of gold in the mix, too.

Just as a quick mental exercise (and I know it's only the vein intersection, but humour me a second, yeah?). How much is a metric tonne of rock that holds 1,775 oz of silver and 3.3 oz of gold worth right now?

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 23, 2008) - Fortuna Silver Mines Inc. (TSX VENTURE:FVI - News; BVL:FVI) is pleased to report that underground exploration and development on the Soledad and Silvia veins at its Caylloma Mine located in southern Peru has confirmed high-grade silver mineralization.

- Systematic channel sampling at 2m intervals along the strike of the Soledad vein returned grades averaging 2,259 g/t Ag, 3.76 g/t Au, 0.94% Pb, 1.47% Zn and 0.20% Cu over the initial 62m of the drift, with an average mineralized vein width of 0.70m.

- Locally, Bonanza style grades have been encountered during systematic channel sampling with grades ranging up to 52,224 g/t Ag and 104.76 g/t Au over a vein width of 0.55m.

Vertical continuity of the mineralization is currently being evaluated through the development of a chimney extending upward along the vein structure. A plan showing the underground workings and the channel sample locations has been posted on Fortuna's website at www.fortunasilvermines.com.

The Silvia Vein, located subparallel to and approximately 50m to the south of the Soledad Vein, has now been intersected in an underground crosscut with rib channel samples averaging 292 g/t Ag, 0.26 g/t Au, 7.98% Pb, 5.05% Zn and 1.86% Cu over a vein width of 2.49m. Underground exploration and development of the Soledad and Silvia veins is continuing for delineation of potential resources and to prepare the veins for production. Mining in both veins will use selective narrow vein mining methods.

The Soledad and Silvia veins are located in the northeastern portion of the Caylloma District in close proximity to the San Cristobal and Santa Cata veins which were extensively mined for high-grade silver ores from the 16th to 20th centuries.

Fortuna announced drill results for the Soledad and Silvia veins in August 2008 (see Fortuna Silver news release dated August 19, 2008), including drill hole STCM000808 which returned 1,937 g/t Ag and 1.89 g/t Au over an estimated true thickness of 1.2m and drill hole STCM000507 which intersected 548 g/t Ag and 1.51 g/t Au over an estimated true thickness of 1.3m.

Background

The silver and base metal-rich Caylloma district is located in the Tertiary volcanic belt of southern Peru. Intermediate-sulfidation epithermal mineralization is present in vein systems hosted by andesitic volcanic and volcaniclastic rocks overlying a Jurassic-age sedimentary basement. The Caylloma Mine was purchased by Fortuna Silver in 2005 and returned to production in October of 2006. Fortuna currently operates the 100% owned Caylloma Pb-Zn-Ag Mine at a rate of over 1000 tpd with production sourced primarily from the Animas Vein.

Fortuna holds exploration and mining rights to concessions covering approximately 13,800 hectares in the Caylloma area. Exploration activities include testing of high grade silver and base metal targets within the Caylloma District and evaluation of surrounding properties to identify opportunities warranting more advanced exploration and development.

Quality Assurance & Quality Control

Sample results reported for the Soledad and Silvia veins are based on channel samples systematically collected perpendicular to the orientation of the vein. Samples are dried, prepared and analyzed at company-owned laboratory facilities at the Caylloma property. Silver and base metals are assayed by atomic absorption methods utilizing an aqua regia digestion. Gold is assayed by standard fire assay methods with an atomic absorption finish. Certified reference standards are blindly inserted into the sample stream at a frequency of 1 per 20 normal samples. Assay blanks are blindly inserted at a frequency of 1 per 40 samples and field duplicates at a frequency of 1 per 60 normal samples. Check assay samples and preparation duplicate samples are routinely submitted to ALS Chemex facilities in Lima to verify sample preparation and assay quality.

Qualified Person

Mr. Gregory Smith, P.Geo., is the Company's Qualified Person as defined by National Instrument 43-101 and is responsible for the accuracy of the technical information in this news release.

Fortuna Silver Mines Inc.

Fortuna is a growth oriented, silver and base metal producer focused on mining opportunities in Latin America. Principal assets include the Caylloma Silver Mine in southern Peru and the San Jose Silver-Gold Project in Mexico. The Company is aggressively pursuing additional acquisition opportunities. For more information, please visit our website at www.fortunasilver.com.

ON BEHALF OF THE BOARD

Jorge Alberto Ganoza Durant, President, CEO and Director

Fortuna Silver Mines Inc.

The TSX Venture Exchange has not reviewed and does not take responsibility for the adequacy or accuracy of this release.

What is it with you guys up there? Can't you find another source of intelligence on Ecuador than this blog? I mean, I didn't mind so much how you Kinross-y people kept hitting this site while the Aurelian buyout was in full swing, but since that died down you would have thought a snarky little corner of cyberspace like this wouldn't be of much interest to a multi-mega squillion goldmine dude like yourself. But no! Every time I so much as mention the word Ecuador the site gets hit half a dozen times by people from your head office.

So here we go with my list of questions, Tye.

1) Are you reading me, your minions, or maybe a combo of the two?2) You've been talking a lot about your "on the ground intelligence" in Ecuador (like at Denver the other day...nice speech, BTW). If that's based on this blog, you guys are in serious trouble cos what I write here is about 25% of what I know.3) If things are so interesting here, how about you sponsor the site with and advert or something?Or better still, just send me money.You know it makes sense.4) And what is it with the gold-coloured ties anyway?

It'd be great to hear from you, and maybe you can just cut out the middleman who's been feeding you all the Ecuador intel this way (or in other words, fire the guy who's been parrotting my posts to you all this time and pay me half his salary). Feel free to mail me at otto.rock1 (AT) gmail (DOT) com, Tye*. Or just go straight for the Paypal button. Have a nice day now, y'hear?

This isn't LatAm, but for once I don't care. Today, Novagold (NG) published this PR to remind warrant holders that a tranche of company warrants priced at $7 expires on October 1st.

Have a look at the recent price chart for this dog-of-dogs, and you'll see.........

......that NG (known by some as 'nadagold') has been languishing under $7 since August 7th. Then suddenly yesterday it managed to stick its head above water by finishing at $7.32. Management immediately reacts by telling the world it can add to the liquidity burden by cashing in the warrants for a tiny profit if they're quick enough. Why? Because if the warrants get cashed, $7 goes to the company coffers and 32c to the poor, beaten down investor.

This is like putting a sign on your back that says "KICK ME", and sure enough NG is already down to $7.10 in early trading. this proves two things about this company

1) They are desperate.2) They don't give a damn about shareholders, they just want your money.

A full two weeks ago I put forward "the Lehman/Beracha riddle" and asked if anyone could solve it. It now looks like somebody is about halfway there, and strangely enough that somebody works in Lehman. Hopefully she'll get paid at the end of this month, too.

Banks in Venezuela are running the ruler over Ecuador holdings, the main reason nothing to do with any pre or post election turbulence. It's more that the brothers in revolutionary arms over in the Bolivarian Republic are some of the arch-capitalists holding portions of the bonds considered 'illegal' by Studmuffin.

The only proven fact in this post coming up right now: President Twobreakfasts García's approval rating is down at 19%. But nobody cares any more...nobody. Peru is tired of him, and he just ignores his people's judgement and does what the hell he wants. And you guys up there think the dictator lives in Venezuela?

The funniest thing is that they're offering about the same as they did in 2005, and much less if you take into account opportunity cost.

ROFL LMFAO!!!!

Ok, trying to keep a straight face about this one, La Nacion is running a good article that tells how the three banks involved, Citi, Deutsche and Barclays, think they can get about 50% of the holdouts to accept a deal at $0.32 to the dollar on the lapsed bonds (they traded at $27 last week, to give you an idea..that's 0.27 on the dollar) because the ATFA vultures are tired of trying to bullyboy their way to a better deal and will take whatever is offered.

Nobody quite knows the exact number, but the best estimate is that there are U$23Bn of holdout bonds out there. So Klishtina can theoretically mop away half of that for U$3.68Bn. A nice bargain compared to the $6.7Bn she's shelling out to get rid of the Paris Club once and for all, and a small slice of the U$50Bn international reserves tucked away at the BCRA.

So the same people who said no to 30c on the dollar three years ago will take 32c, or if you like 6.66% compounded interest over three years.......nice going, ATFA boyz!

9/22/08

This is not how Argentina's President will be appearing in New York this week

(and before you ask, yes, it really is her)

The Argentine stock market has had a rough quarter, as any quick glance at the Merval index will confirm.

But just look what the Merval did today. Wowsers, what a pump'n'dump!

Why so? Because the world heard how Klishtina is going to open up the debt held by the vulture funds, a.k.a. the debt paper that was stupid enough not to have submitted to the debt swap way back in 2005 (here's Reuters on the story). The Merval peaked at 1751 (+5.36%) on the news, then started dropping when....well, when the locals couldn't keep a straight face any longer and sold it all to 'Los Janquis'. It finished just 1.7% up at 1690.

What really happened was that Klishtina, in New York for the UN bigmeet right now, was starting to pick up flak from the loathsome vultures at ATFA and decided to counter in finest Argentine style. Out came the portable smoke'n'mirrors set and suddenly Klishtina was presented with a report "written by three banks" that she "was studying" that would lead the way to her sending a bill to the Argentine Senate that would possibly allow the frozen debt to be negotiated.

Oh what fun! My how I laughed! And the funniest thing is that the gringos actually swallowed this story, hook, line and sinker. The result? Klishtina immediately off the hook while on her sojourn to the Big Apple, she can concentrate on shopping and UNning and we all live happily ever after. Let me make this as plain as possible:

Took profits on the SLV today. This monstrous mess is difficult to understand, but at least in the short-term the cue I'm getting from the LatAm markets (all green) is the Dow/S&P sag of today is temporary. I expect plenty more volatility, and a certain amount of woe is being washed out of the US market as I write.

Therefore, tomorrow is less nervous, the US markets recover (along with the suddenly oversold greenback), oil backs off from this quite incredible move today, metals go through a necessary consolidation phase. All that's a mouthful of words to explain one thing; "Sold SLV", and if you had a 30% profit* to book in a market like this, you'd do the same.

Wouldn't you?

Long term core portfolio untouched as ever. Plenty of cash now and not buying anything today, not even the tempting CZZ. Call me chicken if you like, I don't care. I have three words stuck on a post-it next to the screen, and I'll be damned if I'm going against them now.

Over at Ecuador Mining News Silvia Santacruz has written an interesting story on the ongoing "will-they-or-won't-they" story on the government and its plans (or non-plans) to charge a windfall tax (WFT) to the country's nascent mining industry.

Go see the whole story for yourself over at EMN, but in a nutshell gov't mining person Xavier Cordova made a speech at last week's Denver Mining bash and seemed to say that the gov't was going to scrap plans to charge the proposed WFT, citing the negative fallout that Mongolia had suffered in its mining sector since trying to introduce a WFT there. The speech was picked up in several places, but now EMN reports that it's received communication from José Serrano, (Cordova's boss) that says Ecuador still plans to charge the WFT. Silvia's piece does a good job in presenting the whole story, and adds links to relevant articles about the whole issue. Recommended reading.

So what's going on here? For a start, we're one week before a key election in Ecuador. This means that the gov't may be acting politically to shore up support amongst those who oppose mining in the country and might change their referendum vote to "no" on the 28th because of the whole issue. Or in other words, anything said by the Studmuffin gov't right now needs to be taken with a pinch of salt. Words words words.....this is LatAm! Gimme a signed piece of paper, then you have my real attention.

More importantly, as José Serrano seems to have pointed out in his mail to Silvia, the windfall tax is not a law that is controlled by the mining (and petroleum) ministry. It is strictly a fiscal law that comes from the taxation sector of Correa's government. Therefore Cordova can say what he likes about a WFT being bad or good in Mongolia. Serrano can, too. It's not up to them.

My feeling is that the truth lies somewhere in between the two positions. The WFT is not part of the new mining law (due out in October) but I'm pretty sure that the WFT will make it to the legislative books in Ecuador as part of the new fiscal package. However the practical application of the WFT is the most important part of all this. The WFT is slated as to be applied on a case-by-case basis, which means miner X may well end up paying more than miner Y, and for myriad reasons.

Also, the WFT is applied to a base case price for the metal, and that is open to adjustment from the mining ministry (presumably in conjunction with Studmuffin Correa himself). This means that if Ecuador so decides, it can say "Ok minerguys, if gold goes above $950/oz, or if copper goes above $3.50/lb you pay the WFT", but it could also say "Ok minerguys, no need to worry about the WFT until copper breaks $4.50/lb and gold's at $1,100/oz."

To sum all that up1) Let's wait til after the 28th to find out the real story.2) Let's see what the new mining law brings.3) Even then, the mining law doesn't control the WFT.4) And even when the gov't says "yes, we'll apply the 70% WFT as planned", the whole thing is still open to wide-ranging interpretation.

The bottom line is that anyone who expects the next few weeks will bring total closure on the market doubts about the future Ecuador's mining industry is going to be disappointed. I am confident that the whole package will be resolved in way that's fair to both sides at some point in the future. Just don't ask me 'when', ok?

house toon

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